Reuters: Bankruptcy News: San Bernardino bankruptcy may start trend for Calif cities-Moody's

Reuters: Bankruptcy News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

San Bernardino bankruptcy may start trend for Calif cities-Moody's Aug 9th 2012, 21:46 SAN FRANCISCO | Thu Aug 9, 2012 5:46pm EDT SAN FRANCISCO Aug 9 (Reuters) - The recent bankruptcy filing by San Bernardino, California, underscores the financial stress faced by cities in the state and the potential that more might seek Chapter 9 protection from their creditors, Moody's Investors Service said on Thursday. San Bernardino is the third city in the most populous U.S. state to file for bankruptcy since late June, following the example of larger Stockton and the mountain resort town of Mammoth Lakes. The filings have many in the municipal debt field expecting other financially distressed municipalities in California to consider bankruptcy as a way to renege on obligations. "San Bernardino's bankruptcy is not a sign of systemic risks in the municipal market, but the filing does signal the level of distress and potential for an increase in bankruptcy filings, particularly among California cities," Moody's said in a report. "The recent uptick in bankruptcy filings in California could signify not only a lack of ability, but a lack of willingness to pay debt service at the expense of other financial obligations," Moody's said. If municipalities begin to view bankruptcy as a "palatable solution" for financial troubles that would be a "major negative paradigm shift for the municipal sector to the detriment of bondholders," Moody's said. "It may signal a diminution in the traditional stigma attached to bankruptcy and a shift in how cities regard the sanctity of debt service obligations."

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions